Author Topic: Canadians Start Feeling The Pain Of Debt  (Read 418 times)

Mackin USA

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Canadians Start Feeling The Pain Of Debt
« on: April 23, 2018, 08:20:31 PM »
Easy credit has provided Canadians with a false sense of security and enticed many into the housing market. With household debt already at an unprecedented level, many homeowners will not be able to refinance their current mortgage debt.

https://www.zerohedge.com/news/2018-04-23/reset-looms-canadians-start-feeling-pain-debt
Mr. Mackin

littleman

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Re: Canadians Start Feeling The Pain Of Debt
« Reply #1 on: April 23, 2018, 08:25:44 PM »
My freshman econ teacher taught me that the only good debt is the kind that will give you future earnings -- so many people forget (or never learned) this.

Mackin USA

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Re: Canadians Start Feeling The Pain Of Debt
« Reply #2 on: April 23, 2018, 08:50:11 PM »
It is GOOD that you took ECON

So many people don't.
While consumerism helps drive the economy, it should NOT get out of control.

IMFO
Mr. Mackin

aaron

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Re: Canadians Start Feeling The Pain Of Debt
« Reply #3 on: April 24, 2018, 05:53:47 AM »
Steve Keen has a short book on named Can We Avoid Another Financial Crisis?
https://www.amazon.com/Another-Financial-Crisis-Future-Capitalism/dp/1509513736

sustained rapid credit growth coupled with high levels of private debt eventually lead to consumers getting tapped out, unable to carry any more debt. once the rapid credit growth slows (even if the rate simply slows but does not go negative) that can cause problem because aggregate demand drops.

for instance if private debt to gdp is 150% & credit is growing 15% a year then if credit growth slows to 5% a year that slower rate of growth is sucking out 15% of the demand which would have took place at the former rate of credit growth.

I think his watch list of countries where he expects a debt crisis in the next couple years are: Canada, Australia, South Korea, China, Hong Kong, Norway, Belgium & Sweden

https://www.theglobeandmail.com/report-on-business/rob-commentary/the-inevitable-debt-crisis-canadas-not-talking-about/article29445969/
Quote
Mr. Vague says that any country whose private-debt-to-GDP ratio goes beyond 150 per cent and that has a five-year rate of growth of 18 per cent or greater in that ratio experiences a financial crisis at some point. (The data comes from the Bank for International Settlements.) These two milestones were surpassed during Canada's recent borrowing binge. Canadians collectively owe more than 208 per cent of GDP and private debt to GDP grew more rapidly than the guideline between 2011 and 2016. Private debt grew from 182 per cent of GDP to 208 per cent, well above the benchmark rate of growth for five years.
« Last Edit: April 24, 2018, 05:59:20 AM by aaron »

Mackin USA

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Re: Canadians Start Feeling The Pain Of Debt
« Reply #4 on: April 24, 2018, 12:00:17 PM »
aaron

Good to see you also follow this issue.

I have been Droning On and On about this issue for ages
Mr. Mackin